Lithium

The new energy revolution

The new energy revolution

Lithium is enjoying a growth story unlike any other commodity these days, driven by the global emergence of the electric vehicle market, expanding demand for high-capacity energy storage and the ubiquitous presence of ever-lighter, more powerful, consumer handheld devices. Combined with a supply shortage in a market controlled by a handful of players, prices for so-called ‘white petroleum’ have soared as much as threefold since late last year.

At the moment, about two-thirds of global consumption is used in ceramics, glass, polymers and alloys. But with batteries expected to catapult demand by more than 400 percent over the next four years, the technology and energy sectors will soon become the prime consumers of lithium.

An interview with Nochane Rousseau, Partner, Quebec mining leader, PwC Canada

The questions are, which of the approximately 100 emerging lithium players will survive long enough to build economical projects? What will be the impact of new supplies on prices? 

 

 


 

Sector growth

Rising number of companies

Which of the approximately 100 emerging lithium players will survive long enough to build economical projects? Some institutional investors warn that lithium prices are already in bubble territory and a dramatic correction will occur within the next two years. That concern will put intense pressure on new entrants to move quickly while avoiding any missteps.

Lithium end users

At the moment, about two thirds of lithium consumed globally is used in ceramics, glass, polymers and alloys. But with batteries expected to catapult demand by more than 400% over the next four years, the technology and energy sectors will soon become the prime consumers of lithium.


Navigating the market frenzy: Neo Lithium Corp

Events have been unfolding so quickly for Neo Lithium Corp. over the last year that management now considers patience a strategic imperative. Their goal is to resist the market frenzy and any temptation to rush ahead with a joint venture, or new round of financing. This reflects a new cautiousness among experienced executives running junior miners. The latest market downturn, combined with the prospect of weaker commodity prices over the long-run, have taught many in the sector the importance of developing good assets, strong teams and the right timing.

In terms of the global lithium market, Neo Lithium expects that prices will remain strong despite the metal’s bubble-like trajectory. For one, many of the junior mining firms racing into the space don’t have feasible projects. And second, the green energy revolution is only just beginning.

 

“There’s no question that supply is going to follow demand here, and today supply is not where it should be. I believe that the lithium space has a lot of room to grow.”

Carlos Vicens, CFO, Neo Lithium Corp.

Meticulous market analysis

Nemaska Lithium Inc. has taken a judicious approach to building its business around one of the world’s most attractive hard rock lithium deposits. The Quebec City-based company has moved systematically to secure the support of stakeholders and regulators for its Whabouchi Spodumene mine and to build an effective business plan.

The company analyzed the difficulties other mining companies have faced in trying to develop lithium projects around the world, and it listened closely to what potential customers had to say. Battery makers, cathode materials manufacturers and other end users told Nemaska that there was a need for new, high-quality lithium suppliers.

That analysis and market intelligence gave management the clarity it needed to push ahead with plans to make Nemaska a vertically-integrated, lithium hydroxide and lithium carbonate supplier to the emerging lithium battery market. In July, the company raised CA$69-million on an existing market capitalization of about CA$350-million.

 

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"In my view, we should be providing 40 to 45 percent of supply within five years.”

Guy Bourassa, President & CEO, Nemaska Lithium Inc.


Contact us

Liam Fitzgerald
Partner, National Mining and Metals Leader
Tel: +1 416 869 2601
Email

Nochane Rousseau
Quebec Energy, Utilities & Mining Leader and Perspective North Initiative
Tel: +1 514 205-5199 
Email

Mark Platt
Partner, Assurance
Tel: +1 604 806 7093
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Dean Braunsteiner
Partner, National Assurance Leader, Mining
Tel: +1 416 869 8713
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Mark Patterson
Partner
Tel: +1 604 806 7160
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James Lusby
Partner, Assurance Group
Tel: +1 416 365 8181
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Marelize Konig
Partner
Tel: +1 416 814 5862
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Stephen Mullowney
Partner, Corporate Finance, Mining
Tel: +1 416 687 8511
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